Tuesday, May 10, 2016

Socialism's Dismal Harvest: Venezuela Edition

One of the points I like to stress in my introductory economics course, as well in my course on Economic Expansion and Development is that socialism, when implemented, results in poverty, starvation, death, and cultural ossification. The more hard core socialist the system is, the worse its problems. Mary Anastasia O’Grady documents this in a short essay in the Wall Street Journal. It is an excellent primer in the problems of socialism in which she uses Leonard Read's "I, Pencil" to illustrate what any economic system must do if society is to survive. As O'Grady notes:

In his craving for power, the late Hugo Chávez pledged to redistribute Venezuela’s wealth to the poor masses. The god-father of “21st-century socialism” seems to have been unaware that the resources he promised to shower on his people had to first be produced. . .

. . . Among the many stupidities that socialism promotes is the idea that by imposing price controls and forbidding profits, government can make food both cheap and widely available.

The opposite is true, and Venezuela proves the rule. An August-September 2015 survey by the multi-university, Caracas-based social and economic research project Encovi found that 87% of those polled reported that they did not have sufficient income for food. Their privation is a result of artificially holding down prices, which creates shortages. Consumers are forced to scurry about black markets looking for what they need and then pay dearly for it—if they can. They face killer inflation which, according to the central bank, was 180.9% on an annual basis in the fourth quarter of 2015, up from 82.4% in the first quarter of last year.

Once again history demonstrates what economic theory has told us for over a century: socialism is no laughing matter, unless we are prepared to chuckle at state-created poverty, starvation, and death.

Friday, April 22, 2016

Payday Loans May Cause Excessive Money Loss, But Don’t Throw the Baby Out With the Bathwater

That is the verdict of

Saturday, April 2, 2016

Jeff Herbener Gives the Mises Lecture

Today my friend and department chair, Jeffrey M. Herbener gives the Ludwig von Mises Memeorial lecture at the Austrian Economics Research Conference. You can watch the live stream of the the lecture below:

Friday, April 1, 2016

Austrian Economics Research Conference

The Austrian Economics Research Conference is in full swing and already the attendees have been treated by keynote lectures by Paul Gottried, David Cowan, and Bruce Yandle.

I was blessed to be part of a History of Economic Thought Session, at which I presented the paper, "Austrian Economics as the Solution for Economic Development Theory." The abstract for the paper is as follows:

Two conflicting theories of economic development developed during the Twentieth Century following the proliferation of Keynesianism. A direct descendent of Keynesian theory, the Harrod-Domar model fueled so-called capital fundamentalism—the doctrine that capital alone was the determinate of economic growth. The Solow growth model and subsequent empirical studies drawing on that model asserted contrarily that capital accumulation was an insignificant contributor to economic expansion, but that technology was the driver of continued prosperity. Both frameworks rely on mathematical models and, hence, suffer from problems of aggregation as well as the serious limitations of rarifying assumptions. Much unproductive debate could have been avoided if economic analysis by Ludwig von Mises and other Austrians had been more fully understood and assimilated into the larger body of economic development literature. Austrian capital theory and Mises’ conception of capital as a tool of economic calculation, not merely an aggregate of homogenous physical goods reveals the important relationship between saving and investment in capital accumulation and wise entrepreneurship within the market division of labor as distinct, yet interrelated engines of prosperity. Such a link also helps to resolve the true relationship between capital and technology as sources of economic progress.

Tomorrow we will be treated to the Mises Memorial lecture given by my friend and Department Chair Jefferey M. Herbener.

Thursday, March 24, 2016

Socialism: Communist, Conservative and Social-Democratic Style

This past Saturday I was again blessed to be a guest on the program A Plain Answer. The show is broadcast on the Redeemer Broadcasting radio network. Dan Elmendorf and I talk about socialism in some of its several varieties. This program is as timely as our current election cycle You can listen to the discussion by clicking here.

Chapter 18 of my book Foundations of Economics: A Christian View is devoted to this subject. In it, I discuss both the economics and ethics of socialism. For those looking for an in-depth investigation into various forms of socialism and its alternative, the free market, I recommend Hans-Hermann Hoppe's A Theory of Socialism and Capitalism.

Monday, February 22, 2016

More Resorces on Cuba

My most recent post featured links to a radio episode and magazine article that briefly mentioned the plight of citizens as it related to nutrition after the Castro Revolution. If you are interested in learning more about the consequences of socialism for cuba I recommend the following:

"Why Havana Had to Die."
This is an article one of my favorite conservative authors, Theodore Dalrymple. The piece is about fourteen years old and still  as prescient as ever. The truth always is.

"Capitalism, Cuba, and Castro: A Report from Recent Travels"

This is a lecture by former Soviet economist Yuri Maltsev, presented at the Austrian Scholars Conference in 2004. He documents the tragic consequences of socialism for Cuba. Unfortunately, all we have is the audio recording, but the content is worth careful attention.

Saturday, February 20, 2016

Socialism Starves the People: Cuba Edition

“What were the three greatest successes of the revolution? Education, health, and defense. What were the three greatest failures? Breakfast, lunch, and dinner.”

                                                 ---Cuban Food Joke

The radio program The Splendid Table recently featured a story about the rediscovery of good food in Cuba. One of the segments featured an interview with writer Tamar Adler whose piece "Why Cuba Is Becoming a Serious Culinary Destination" explains how the gastronomic life of Cubans is beginning to recover from decades of socialism.

You can listen to the segment and read excerpts from Adler's interview by clicking here.

Adler explains how Castro's revolution and regime drove the populace to the brink of starvation. Following the revolution, Cuba's international trade slowed to a crawl. In response to the question of how Cuba's isolation effected Cuba's culinary identity, Adler replied:
Severely. The worst of it really started with the collapse of the Soviet Union in the late '80s and early '90s. Cuba, like the U.S., was a petroleum-dependent, highly industrialized, agricultural society. It lost all of its oil imports when the Soviet Union collapsed, which resulted in just short of starvation nationwide.
In her written article Adler elaborates:
Back before the island’s food markets and restaurants were nationalized in 1959, Cuba’s large upper middle class ate well. Then, private enterprise was forbidden. Food rationing began in 1962 and remains, via the libreta de abastecimiento (supplies booklet), which the journalist Patrick Symmes, who has been reporting on Cuba since the 1990s, has called “the foundational document of Cuban life.” The collapse of the Soviet Union around 1991 marked the beginning of the most artfully euphemized epoch I’ve heard of: Fidel Castro’s Special Period in Peacetime, during which Cuba lost up to 85 percent of its imports and exports. Farms went fallow. Cubans lived on sugar water until dinnertime. Stories abound of dairy cows eaten for meat, of street cats and zoo animals going missing. The weight of an average Cuban decreased by 30 percent 
While the program segment happily focuses on the recovery of the Cuban culinary scene after Fidel Castro's stepping down from power and the subsequent opening of Cuba, it also reminds us of how socialism actually impoverished the people by making their mundane, ordinary lives much more difficult to live. The Cuban socialist episode is another negative example of how socialism hurts the masses, the very set of people it promises to help.